2024 (11) TMI 176 - HC - Income Tax

Delay of 80 days in filing the Return of Income - genuine hardship due to delay - eligible reasons for delay - HELD THAT - A perusal of the provisions of Section 119 (2) (b) of the Act shows that the power conferred therein upon Respondent No. 1 is for the purpose of avoiding genuine hardship . In our view, the Petitioner would be put to genuine hardship, if the delay in filing the Return of Income is not condoned. This is because the Petitioner has given valid reasons for not filing the Return of Income on time. The Petitioner has mentioned that her father had passed away on 30th November, 2022 due to Covid-19 and that her family members were affected by Covid-19 in November, 2020. The Petitioner, who is a doctor, was involved in Covid-19 duty at that time. The valuation of land for working out capital gain could not be completed prior to the due date of filing of the Return due to the said reasons and as the valuer was not able to carry out physical verification of the site until 13th February, 2021 and provide the Valuation Report until 16th March, 2021. In this context, it is important to note that the valuer was also a senior citizen aged 75 years. In our view, if for these reasons, the delay of 80 days in filing of the Return of Income by the Petitioner was not condoned, then definitely the Petitioner would be put to genuine hardship as the Petitioner was prevented by genuine and valid reasons for not filing the Return of Income on time. It can never be that technicality and rigidity of rules of law would not recognize genuine human problems of such nature, which may prevent a person from achieving certain compliance. It is to cater to such situations that the legislature has made a provision conferring a power to condone the delay. These are all human issues which prevented the assessee, who is otherwise diligent, in filing the Return of Income within the prescribed time. In our view, Respondent No. 1 failed to consider the same. Respondent No. 1 completely lost sight of the fact that not only was the Petitioner a doctor who was on covid duty but that the Petitioner faced various other problems due to the Covid-19 pandemic, and that was the reason why the Petitioner could not file her Return of Income within time. Respondent No. 1 has also rejected the Application on the ground that the Petitioner, being an educated person, was well equipped with basic taxation law knowledge and, had accessibility to tax practitioners and, therefore, the claim of the Petitioner that she was not able to collect various information regarding income tax calculation, was not tenable. Again, we are afraid that we are unable to accept this reason of Respondent No. 1. The Petitioner has not claimed lack of accessibility to a tax practitioner. It is the case of the Petitioner that, for various reasons, which arose due to the Covid-19 pandemic, she was not able to obtain the Valuation Report in respect of the property on time and, therefore, was not able to compute the capital loss and file the Return of Income. In this view of the matter, we are unable to accept the said reasons given by Respondent No. 1 for rejecting the Petitioner s Application for condonation of delay. Thus impugned order dated 20th October, 2023 passed by Respondent No. 1 is hereby quashed and set aside.The delay of 80 days in filing of the Return of Income for Assessment Year 2020-2021 by the Petitioner is hereby condoned.

Summary

Issues Involved:
1. Condonation of delay in filing the income tax return.
2. Legitimacy of the reasons provided for the delay.
3. Application of Section 119(2)(b) of the Income Tax Act, 1961.
4. Evaluation of genuine hardship due to delay.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Income Tax Return:
The petitioner sought condonation of an 80-day delay in filing the income tax return for the Assessment Year 2020-2021. The delay was attributed to several factors, including the Covid-19 pandemic, the petitioner's professional obligations as a doctor, and personal family tragedies. The petitioner had filed an application under Section 119(2)(b) of the Income Tax Act, 1961, with the Central Board of Direct Taxes (CBDT) to condone the delay and allow the carry forward of long-term capital loss. The application was initially rejected by the respondent, leading to the present petition.

2. Legitimacy of the Reasons Provided for the Delay:
The petitioner provided detailed reasons for the delay, including the impact of the Covid-19 pandemic, her father's death due to Covid-19, and the subsequent illness of other family members. The petitioner, being a doctor, was involved in Covid-19 duties, which further delayed her ability to coordinate with her tax consultant. Additionally, the valuation of ancestral property required for calculating capital gains was delayed due to the valuer's inability to conduct a physical site visit amid pandemic restrictions. The court found these reasons to be valid and justifiable, recognizing the genuine human challenges faced by the petitioner.

3. Application of Section 119(2)(b) of the Income Tax Act, 1961:
Section 119(2)(b) empowers the CBDT to condone delays to avoid genuine hardship. The court emphasized that the provision is meant to address situations where technicalities and rigid rules could prevent compliance due to genuine human issues. The court observed that the petitioner faced genuine hardship due to the pandemic and related circumstances, which justified the condonation of delay. The court criticized the respondent's mechanical approach in rejecting the application without adequately considering the petitioner's circumstances.

4. Evaluation of Genuine Hardship Due to Delay:
The court concluded that the petitioner would face genuine hardship if the delay was not condoned. It noted that the petitioner had provided substantial reasons for the delay, including her professional obligations and personal losses due to the pandemic. The court highlighted that the legislative intent behind Section 119(2)(b) is to provide relief in such genuine cases, and the respondent failed to appreciate the petitioner's predicament. The court drew parallels with previous judgments, emphasizing the need for a humane approach in such situations.

Conclusion:
The court quashed the impugned order dated 20th October 2023, passed by the respondent, and condoned the 80-day delay in filing the return. The respondents were directed to permit the petitioner to file the return without penalty, fees, and interest within two weeks. The court underscored that all contentions regarding the merits of the return were kept open, and no costs were awarded. The judgment reinforced the importance of considering genuine hardships and human factors in legal proceedings, particularly in the context of tax compliance during unprecedented times like the Covid-19 pandemic.